Just Say No to Bad Pallets, Says Executive

Packaging executive says that pallets from China can pose problems for supply chains, so be clear in your quality demands

“Many U.S. importers regard procurement cost and pallet vendor selection as the shippers’ burden, but this is risky and exposes an importer to severe supply chain disruptions should their pallets not be compliant with local requirements and face rejection by border officials,” Daniel M. Krassenstein wrote recently in a Journal of Commerce Article, Pallets from China May Pose Risks to Supply Chains. Krassenstein, director Asia operations for Procon Pacific, added that U.S. importers are missing an easy opportunity to improve their supply chain and reduce their costs.

Krassenstein has experienced wood pallets being rejected at U.S. Ports of Entry because of ISPM-15 stamp noncompliance. He emphasized the importance of establishing quality assurance controls with wood pallet suppliers so that no mistakes are being made and no shortcuts being taken. “Because regardless if your provider procures the pallet, you, the U.S. importer, are paying for it as the costs are built into your free on board cost and you are the one incurring the risk,” he wrote.

Krassenstein observed that pallets with chipboard deck boards and stringers or blocks are used, which avoids the use of solid wood packaging and the need for ISPM-15 compliance. Durability can be an issue with such pallets, however. “Typically, they’ll be okay for single use from China to your first U.S. destination, but if your customer wishes to reuse that pallet, the bottom stringers are more likely to break off, or the composite wood blocks are more likely to break free than with the solid wood alternatives,” he reported.

“Your vendor in China probably does not even realize the impact of the pallets they use — they are most likely just buying the least expensive option that they can find,” Krassenstein speculated. “However, U.S. importers have every right to dictate minimum standards and runs the risk of making a costly mistake if they do not do so.”

Krassenstein’s comments ring true to my experience with inbound pallets at import warehouses. After reading his article in JOC, I asked him if it is relatively common practice for importers to resign themselves to receiving poor quality pallets.

“Yes, I do think it common practice for importers to just accept poor pallets as something which is out of their control,” Krassenstein said. “As an American importer based in the States, there are only so many battles you can fight every day. Procurement is a delicate balance of three equal important factors: price, quality, timeliness.  And these three factors relate to the product itself.

“If you get too particular about the packaging, or even, heaven forbid, the pallet, the supplier may look at you as overly nit-picky and perhaps not worth their time or effort unless you overpay or have huge volumes.

“If you think about it, typically, the China supplied pallet is “good enough” for the single/first move from Asia to the U.S. Distribution Center.  However, often, the American importer would prefer to keep that pallet intact and send that full pallet onward to their next client.  However, if the pallet itself was damaged, then they have to go through the effort of replacing that pallet.”

I also asked Krassenstein if customers who request pallets of a particular quality from Chinese vendors are successful in such demands. “At the end of the day, whether the exporter is Chinese, German or Mexican is not even relevant,” he said. “More important is whether the supplier sees it in their best interest to keep the buyer satisfied. That could be tied to whether future orders are dependent upon keeping the buyer happy and may also be tied to the profit margin for the seller.  Either way, if the buyer just makes it known in writing up front that a pallet meeting certain specifications is required and it treated as part of the PO spec, then it becomes a requirement.”

Encouraging customers to pay a little more for non-timber pallets is easy, Krassenstein stated, once they relay the story of two containers arriving in Seattle from Shanghai. “It made zero difference that the supplier innocently chose a solid wood supplier from Anhui who cheated – we held them responsible for all the costs related to meeting the clients’ needs (including air freight). After sharing that story and informing the suppliers that RMB 60 wooden pallets wood need to be replaced with RMB 80 press wood pallets – no one complained.”

Procon Pacific LLC offers a non-pallet alternative called the TELLAP. It is an Australian patented product which builds sleeves into the bottom of a bulk bag. Reusable plastic inserts fit inside these sleeves which can sustain the friction and handling of a forklift truck. For more information, visit www.proconpacific.com.